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TJX Stock Climbs 1.3% Ahead of Q2 Earnings: What To Watch

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Shares of TJX Companies (TJX - Free Report) popped 1.3% during regular trading hours Monday to touch a new 52-week and all-time high of $101.80 per share. This climb might signal that investors expect big things from the retail powerhouse’s Q2 financial results. But let’s see what they should really expect amid the strong stretch from the industry as a whole.

TJX has seen its stock price surge over 34% in the last six months and 20% during the last three. The off-priced seller of apparel and home fashions is riding a wave of positive momentum throughout the retail industry as investors realize Amazon (AMZN - Free Report) fears may have been overblown. Strong quarterly reports from Nordstrom (JWN - Free Report) , Walmart (WMT - Free Report) , Home Depot (HD - Free Report) and others helped to highlight retail’s strength. But not every retailer has performed well so far.

TJX Q2

TJX is projected to see its Q2 revenues jump by over 8% to reach $9.03 billion, based on our current Zacks Consensus Estimate. The firm is also expected to see its adjusted quarterly earnings soar by 23.5% to hit $1.05 per share. Still, we need to see how likely it is that TJX can outperform its earnings estimate.

Luckily, we can turn to our exclusive Earnings ESP figure to do so. Zacks Earnings ESP (Expected Surprise Prediction) compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change.

This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

TJX sports an Earnings ESP of 1.26% and a Zacks Rank #2 (Buy), based on recent positive upward earnings estimate revision activity for both its second quarter and its current fiscal year. Plus, TJX hasn’t fallen short of our quarterly earnings estimates since 2014. Therefore, there is a solid chance that TJX is able to surpass our Q2 earnings estimate.

TJX is set to report its Q2 fiscal 2019 financial results before the market opens on Tuesday, August 21. Investors should also pay close attention to Home Goods’ performance and same-store-sales growth.

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